[THE INVESTOR] Major accelerators in Southeast Asia and China have called on ambitious Korean startups to leverage the booming startup scene in the region to expand into larger markets.
The Investor interviewed key speakers from Malaysia, Singapore and China at the Startup Campus 1st Anniversary Conference held at its complex in Pangyo, south of Seoul, to talk about each country’s dynamic and unique venture ecosystem that could be the next home for Korean startups eying further expansion.
Malaysia, an ideal first step to tap SE Asian market
Rizal Saiul Zainuddin, manager of Global Accelerator Program at MaGIC, views Malaysia as the ideal first step for local startups to penetrate into the diverse Southeast Asian market that comprises 11 countries.
Rizal Saiful Zainuddin, manager of GAP at MaGIC. Startup Campus
“Malaysia is definitely a good place to start,” Zainuddin said. “We have a multiracial community. So you can take your products to different races. We speak many languages, including English, Chinese and Tamil, among others. It is really a good platform to build a startup, where there is great government support for entrepreneurship.”
MaGIC, which stands for Malaysian Global Innovation & Creativity Centre, is the government agency for startups and entrepreneurship that has played a significant role in initiating the local startup ecosystem.
The center runs various accelerator programs for both Malaysian and international ventures, including the latest four-month-long Global Accelerator Program that has just nurtured around 60 startups from 17 countries to be investment-ready.
Some Korean startups have joined the agency’s accelerating programs, including language education startup Eggbun Education, children education firm SmartStudy -- which created popular Pinkfong character -- and VREX Lab, a location-based augmented reality messenger app.
“After Eggbun graduated from our program, they got the opportunity to join Distro Dojo funded by 500 Startups. After that, they entered Europe,” he said. “For SmartStudy, they were already big enough when they joined the program. But they wanted more exposure and expansion in ASEAN countries. So they leveraged Malaysia to go to Singapore, Thailand, Philippines and all neighboring countries to export their businesses.”
He believes more Korean startups -- armed with a great business model and technology -- can join the success tales to add value to the Malaysian startup ecosystem, while utilizing the country to move forward.
Startups prove China myth wrong
China is an attractive market for both big companies and small startups looking to expand and scale. However, many successful foreign giants, such as Google, Facebook and Uber, have struggled to crack the 1.37 billion population market.
But Chinaccelearator, the country’s first and longest-running accelerator, has proved the China myth wrong, with a list of successful startups that not have only entered but also thrived in the market.
“The reason for this is these startups are very agile and nimble,” Vivian Law, innovation director at Chinaccelerator, told The Investor. “They are able to localize their products and are very quick to adjust to consumer needs. They don’t just assume the copy-paste model, which a lot of big companies do.”
Vivian Law, innovation director at Chinaccelerator. Startup Campus
Leveraging the right network and right resources is critical in China, where guanxi, relationship, is crucial in doing business, she added. And Chinaccelerator, which is part of the larger American VC SOSV which operates eight accelerators worldwide, can effectively nurture startups, utilizing its global network and through partnership with retail giants like Wal-Mart and Target, in addition to 280 plus mentors who are renowned entrepreneurs and industry experts.
It also works with Chinese tech giants Alibaba, Baidu and Tencent for its accelerating program. The startups get a chance to visit the headquarters of the three firms during the program, where they get a first-hand experience and meet with officials.
“It’s a wakeup call for the entrepreneurs,” she said. “It’s good for them because you get to hear from the leading players what they are looking for from the insider’s point of view.”
Chinaccelerator has invested in over 700 startups since its inception in 2010, with its portfolio including unicorn BitMEX, bitcoin-based trading platform that recently was ranked No. 1 bitcoin exchange in the world, as well as some Korean startups including VREX Labs.
Chinaccelerator, she noted, is seeking more Korean startups to join its stellar portfolio, adding, “help us to help you.”
When selecting startups, it looks at mainly four criteria: problem, solution, team and traction.
“First, we see whether this pain point is real in the market. Do you have enough users to care about this problem? What is the total addressable market?” she said. “For solutions, we ask, ‘why do you have the unfair advantage that no one else can replicate?’”
For the team, the mentorship-driven accelerator checks if the team has expertise and what kind of failures they faced. “What did they learn from the experience?”
“As for the traction, we have companies that already have revenue and profit. Others might not have that, but they might have users.”
Business friendly Singapore is gateway to SE Asia
Singapore is billed as one of the best places for startups in the world, with tax credits, ease of incorporation, location, infrastructure and high tech talent for its thriving ecosystem, according to Marianne Tan, head of partnership and internationalization at Action Community for Entrepreneurship.
“Among the several factors that make Singapore very favorable environment for startups is first, its corporate tax rate,” Tan told The Investor. “Singapore has a relatively low tax rate for businesses in comparison to our neighboring countries and in the world. For startups, there is also a tax exemption scheme. We have a stable government and a very strong intellectual property law that is beneficial for tech startups.”
Marianne Tan, head of partnerships and internationalization, ACE. Startup Campus
The extensive government support also includes land and infrastructure available for startups, known as the JTC LaunchPad @ one-north, the startup venture cluster located at the heart of the city known for expensive real estate.
The government initiated area, which covers seven blocks and about 65,000 square meters, is home to some 800 startups organizations -- such as startups, accelerators, incubators, VCs and government agencies.
Now privatized ACE, formerly a Singapore government-led entrepreneurship entity, is also located here, with a mission to support local startups to venture overseas while help international startups to make inroads into Singapore.
The center, through its flagship Market Access Program, brings international startups to the city-state to help understand the various business opportunities in the country. Startups can meet with relevant investors and partners and also view the product-fit of the market, while receiving tax and legal services if needed.
“We hope to attract more companies from Korea and other countries,” Tan said, adding that Korea and Singapore share many cultural similarities that are beneficial for Korean startups eying the country.
She views “product-fit” as an essential criteria for Korean startups eying to make inroads in the nation. “We want to see the product-fit, whether it is suitable for the Singapore market,” she said. “Because what works in Korea might not work here and they would have to tweak and change a bit for localization."
“Their solutions must cater to the Singapore market and address certain kinds of gaps as well. Because it is often hard to find these gaps, if Korean firms can find solutions, they could potentially fit into the market.”
By Ahn Sung-mi (firstname.lastname@example.org)